by Michael Hugos

For CIOs, the Games Are Just Beginning

May 31, 20123 mins

Companies are starting to use the motivational techniques of video games -- such as points, leaderboards and levels -- to create more engaging business applications. It's called "gamification."

Gamification–it’s the awkward word that describes the practice of applying game- design thinking to non-game applications so people find them more interesting and engaging.

Today, companies are starting to use common video-game techniques such as points, badges and leader boards to make their websites more interactive and to reward people for their contributions. But this is only the start of the inevitable merging of games and business.

With all the serious stuff going on in the world today, why are people talking about games at work and why are they doing it now? The answer comes down to two things: technology and demographics.

The widespread use of social media such as Facebook and Twitter, and the rapidly expanding use of smartphones and tablets have created new ways to reach and interact with customers.

Meanwhile, the number of people who play video games is growing quickly–even among folks who are in their 40s and beyond–and playing games has become more social (think of FarmVille on Facebook). Conditions are ripe for extending game techniques beyond their traditional boundaries and employing them in other online activities.

Brand-name companies are experimenting with gamification as you read this. Samsung created Samsung Nation–the electronics industry’s “first gamified corporate website”–where loyal customers engage and compete for badges, points and other rewards as they watch videos, comment on articles or review products.

And adopted an application called Nitro that lets sales managers set up motivational campaigns and competitions to reward sales teams for reaching certain goals.

Market research firm Gartner says that 50 percent of companies will embrace gamification by 2015.

Gamification software companies such as Achievers, Badgeville, Bunchball, Gamify and Igloo claim that companies can reap significant benefits, such as increasing product awareness, sales and customer satisfaction.

It works because gamification techniques create a feedback system that responds to peoples’ actions and encourages them to do more. When people perform a desired action, they’re awarded points or badges.

Yes, gamification at the moment may seem kind of trivial. Sometimes you have to wonder who has time for it. However, don’t confuse these humble beginnings with the revolutionary change they are bringing about.

Imagine the business benefits that could come from adding fun, engaging and rewarding experiences to software applications used by customers and employees.

The apps would leverage the capabilities of smartphones, tablets, cloud computing and social media. And they can be built on top of systems that companies already use for work, such as ERP, CRM, supply chain and HR systems.

Ultimately, “the highest use of games will be to redesign work so that it is more like a game and to allow work to be conducted within games,” according to Total Engagement, a book by Stanford business professor Byron Reeves and venture capitalist J. Leighton Read. They say work will be “hopelessly confused with play,” resulting in benefits for both the players and the businesses involved.

As companies strive to find their way in this confusing real-time economy, the good news is this: Video games already provide a rapidly increasing body of field-tested best practices for using technology to create feedback systems to attract and engage people.

Michael Hugos, a former CIO, is principal at the Center for Systems Innovation. His latest book, Serious Games: The Future of Work, will be available next month.